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CMA Final · Direct Tax Laws and International Taxation · Different Aspects of Tax Planning

Greenleaf Traders Ltd furnished a statement of specified financial transactions. The prescribed income-tax authority found a defect and intimated it to the company. Under the Income-tax Act, 2025, what is the position if the company does not rectify the defect within thirty days or any extended period allowed?

If the defect is not rectified within thirty days or the extended period, the provisions of the Act apply as if the company had furnished inaccurate information in the statement. The statement is not treated as unfiled, and extension is discretionary on application, not automatic.

  1. AThe statement is treated as never furnished and a fresh notice is mandatory
  2. BThe Act applies as if the company had furnished inaccurate information in the statementCorrect
  3. CThe defect is ignored once thirty days lapse
  4. DThe authority must extend the period automatically until rectified

Explanation

Section 508(6) provides that if the defect remains unrectified within thirty days or the extended period, the Act applies as if the person had furnished inaccurate information. It does not say the statement is treated as not furnished, which is the consequence under the failure-to-furnish route. Extension is discretionary on application, not automatic.

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